Yudit Kiss - New trends in weapons production in East Central Europe reflect major changes in the global arms industry
Several of the world’s largest arms manufacturers are
located in Western Europe, but how has the arms industry developed in Central
and Eastern Europe since the end of the Cold War? Yudit Kiss writes
on the development of companies involved in weapons production in the region.
She highlights three key global trends which characterise the industry: the
impact of globalisation, the emergence of multiple new players, and the
existence of blurred boundaries between civilian and military companies.
Under the previous system, the military-related segment of
the economy had clear-cut borders: weapons were manufactured by a relatively
closed group of state-owned companies inside national boundaries. Today’s
liberalisation, increasing division of labour, globalisation and the dominance
of integrated systems that replace “homogenous” end-products, blur the
boundaries between national/international and civilian/military industry...
Stockholm-based SIPRI has recently published the
latest database on global arms production. The material shows a fundamentally
unchanged situation; for the last decades, by and large the same group of key
companies headquartered in North America and Western Europe has dominated the
world’s weapon production. The only remarkable exceptions, large-scale
state-owned military-industrial complexes in China, some of which might well
rank in the top 20, do not figure on the list, due to the lack of accessible
output figures.
The global arms industry is a frozen, hierarchical system,
characterised by tough competition, monopolistic positions and increasing
costs. Underneath this seemingly static sphere, however, there is a rapidly
changing, complex, busy underworld: the extremely competitive and mobile, multi-layered
system of subcontractors. One of the fundamental changes of the last two
decades has been the gradual transformation of the key weapon companies from
primary producers into system integrators and the end products they offer
contain key elements of their multiple sub-contractors.
Prime contractors have varied and complex relationships with
their suppliers ranging from occasional sales or cooperation to joint ventures
or straight ownership. Subcontractors might cater to various big players who
compete with each other on the global arms market, but are also often tied
together through joint projects and indirect links of shared inputs or
cross-ownership.
The arms producers of East Central Europe (ECE) – Bulgaria,
the Czech Republic, Hungary, Poland, Romania and Slovakia – represent a tiny
segment of the world’s weapons production. Despite its modest size and
subordinate status, the study of this segment provides important lessons about
changing economic and social systems and industrial adjustment, highlighting
major new trends in the world’s arms industry, some of which are described
below.
Globalisation
During the Cold War period, the arms industry was an
isolated universe in the Eastern bloc. Weapons production was a closed segment
of national economies and arms were traded inside the Warsaw Pact system, with hardly any links
to Western arms-manufacturers and only loose commercial ties with some
left-leaning Third World countries. Today the region’s arms industry is
integrated into national economies and has vital links with the world’s
globalising weapon-producing networks and arms markets.
After having lost the large-scale and strictly regulated
captive market that the Warsaw Pact represented, the region’s arm producers
have made considerable efforts to reach new outlets all over the world. Since
NATO-related markets are difficult to enter, most ECE produced military items
are sold in Asia, Africa, the Middle East and some Latin American countries... read more:
More by Yudit Kiss on the economics of the arms industry
Yudit Kiss grew up a communist in Budapest, soaking up her father's ideology unquestioningly. As a child she is puzzled when others refer to her as Jewish; she only knows that her family doesn't believe in God.
